|Date:||22 March 2018|
|Authors:||Neil Amin Smith , David Phillips and Polly Simpson|
A new IFS report, 'Adult social care funding: a local or national responsibility?', funded by the Health Foundation, argues that ongoing reforms to local government finance risk a growing funding gap for adult social care and conflict with efforts to provide consistent and high-quality care services across the country.
The government plans to abolish general grant funding for councils from 2020, meaning councils will depend on council tax and business rates for the vast majority of their general funding. But revenues from these taxes are unlikely to keep pace with the rising costs of adult social care services, leaving councils with increasingly tough choices about which services to prioritise.
We identify the following challenges:
Even if council tax revenues increased by 4.5% a year – more than double the rate of projected inflation – adult social care spending could amount to half of all revenue from local taxes by 2035. That is up from just 30% today.
If councils did meet these costs from their local tax revenues, the amount left over for other services – including children’s services, housing, economic development and bin collection – would fall in real terms (by 0.3% a year, on average). In other words, decades more austerity for services that have often already seen cuts of 20% or more since 2010.
Even if larger tax revenue increases could be delivered, or growth in the cost of adult social care constrained, ongoing changes to the way local government finance is allocated mean that different councils could find themselves with revenues that differ significantly from their spending needs. This is because there is now less redistribution between councils as spending needs and local tax revenues change over time.
And changes in relative spending needs and revenues can be significant:
For instance, between 2006–07 and 2013–14, 1 in 5 councils saw their relative ability to raise local tax revenues fall, whilst their relative need for adult social care increased, according to official needs assessments.
There is no easy way to square this circle without backtracking on reforms to local government finance and reintroducing general grant funding: